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(KMID/KPEJ)- On August 17, a new set of rules governing most real estate professionals went into effect, forever changing the process of buying and selling a home. Local realtor Connie Coots, with the Odessa Board of Realty, said these changes will benefit both buyers and sellers.
The National Association of Realtors agreed to the new set of rules as part of a $418 million settlement into antitrust claims; these new rules were designed to transform the way realtors get paid and who pays them and is the largest change to the organization’s rules in decades.
“The NAR agreed to settlements from claims that arose from home sellers out of Michigan…the NAR agreed to removed commissions from our MLS…,” Coots said.
In October 2023, a federal jury determined that the NAR “conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust law”. In short, the court determined that the NAR’s commission structure infringed upon antitrust laws because the essentially forced home sellers to pay a fee that could be paid by the buyer.
Related: Looking to buy or sell a home? Here’s the best time: The suit alleged that sellers, who were required to pay the commissions for both agents, compensated for the loss by increasing list prices, putting buyers at a disadvantage and inflating home costs nationwide.
Here’s what you need to know:
Historically, buyers were not expected to pay their real estate broker directly. That’s because realtor commission fees, to both the buyers’ agent and the sellers’ agent, were paid by a home seller.
Commissions usually total five to six percent of a home’s selling price; for example, a $450K home, roughly the average price of a home in the U.S., a seller would be responsible for $27,000 in fees. Some realtors have said these commissions have been added into a home’s listing price, inflating home prices.
But beginning this week, seller’s agents will no longer be allowed to advertise commission fees to buyers’ agents on multiple listing services that realtors use to list and find homes for sale and to facilitate transactions.
That means that a buyer’s agent can no longer use the database to search for houses based on how much they’ll get paid, a practice called “steering,” which led some agents to skip over showing homes that fit their client’s criteria solely because a seller was offering below-market commission rates, critics allege.
The second change affects the relationship between prospective home buyers and their real estate agents. If you’re looking to buy a new home, and especially if this is your first home, the biggest takeaway here is that before you ever step foot into a home, you must sign an agreement with a realtor before that realtor can unlock the door for a tour. This agreement will legally bind a buyer to a particular agent for an agreed-upon timeframe and will outline a relators duties to their buyer as well as their compensation.
These agreements are designed to inform home buyers how their agent gets paid, and if sellers do not agree to pay the agent’s commission, the buyer may be on the hook for that payment. They’re also designed to inform buyers that this commission is fully negotiable.
To learn more about these changes, visit this website .
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